Scotland and Northern Ireland still leading the pack
Britain's regional property markets experienced considerable variations in fortune last year, with Scotland and Northern Ireland leading for the second year running. London is reasserting its dominance, but northern England's markets are cooling fast.
Northern Ireland was one of the strongest property sectors in the world last year. According to Britain's biggest mortgage lender, Halifax, property prices there rocketed 53 per cent.
Halifax expects Northern Ireland to be the only British region to enjoy double-digit price growth this year as the national slowdown affects every region. The average price of a house in Northern Ireland is GBP196,874 (HK$2.96 million), 5 per cent above the British average of GBP186,954. The peace dividend has encouraged urban regeneration projects that have drawn investors and other homebuyers into the province, raising prices.
Having missed out on the late 1990s property boom, Scottish house prices have doubled over the past five years. They increased 13 per cent last year, making it Britain's second-strongest property market. It will remain one of the stronger markets this year because it still has plenty of catching up to do with the rest of the country. Edinburgh, Aberdeen and Dundee are hot spots.
'The housing market in Scotland continued to grow at a faster rate than the UK average for the fourth consecutive year in 2006,' said Tim Crawford, group economist for Bank of Scotland. 'Despite this, Scotland remains the most affordable part of the UK to buy a house, with an average house price nearly a third less than the UK average.'
Prices rose 13 per cent in East Anglia last year. However, Halifax expects a more modest 5 per cent rise in prices this year.
Last year's strong revival in London's property market continues. Bonus-spending financial services workers and overseas investors have been splashing out on luxury homes, pushing prices higher, reports estate agency Savills. The city's price rises are rippling out to South East England as homebuyers search for affordable properties further afield.
South West England's huge popularity with second home buyers - a third of the UK's holiday homes are in the region - pushed prices up 11 per cent in the region last year. However, with locals struggling to get a foot on the property ladder, house price rises will slow this year.
For several years, from the early '90s, the North, North West and Yorkshire and Humberside regions were Britain's hottest property markets. They are cooling rapidly because plentiful supply and the difficulties many northerners have raising money to buy them is further suppressing price rises. The market is slowing in the East and West Midlands too, with Halifax forecasting price rises in line with the national average this year.
Last year was another strong one for Welsh property, but affordability problems may restrict demand this year. Halifax says 20 out of 21 towns in Wales are too expensive for first-time buyers.